(Bloomberg) -- Traders are bracing for a re-imposition of U.S. sanctions on Iran that could disrupt oil exports by OPEC’s third-largest producer.
Crude futures rose as much as 0.8 percent in New York on Friday. Even though U.S. President Donald Trump has yet to announce whether he’ll pull out of the 2015 Iranian nuclear deal, American officials already are positioning for post-accord negotiations. Trump faces a May 12 deadline to opt in or out. For their part, Iranian leaders have ruled out new talks.
“It’s back to what’s been haunting the market and is going to continue as we move a day closer to May 12,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. “The geopolitical jitters are just infecting the market.”
Crude has risen about 50 percent in the past year as OPEC and allied producers crimped a global glut and geopolitical risks multiplied in the Mideast region that’s home to almost half the world’s oil.
West Texas Intermediate crude for June delivery added 41 cents to $68.84 a barrel at 10:24 a.m. on the New York Mercantile Exchange. Total volume traded was about 6 percent below the 100-day average. Prices are up 1.1 percent this week.
Brent crude for July settlement climbed 25 cents to $73.87 on the London-based ICE Futures Europe exchange. The global benchmark crude was at a $5.17 premium to July WTI.
“This will be the main issue preoccupying the oil market, with fundamental factors such as stock levels and production data taking a back seat until this has been resolved,” said Carsten Fritsch, an analyst at Commerzbank AG (DE:CBKG) in Frankfurt.
In the U.S., record crude production has been a headwind on the price rally. A dearth of pipeline capacity in the biggest American oil field -- Permian Basin of West Texas and New Mexico -- has crushed local prices: some grades of West Texas crude are selling for almost $14 a barrel less than the U.S. benchmark, the steepest discount since July 2014.
Other oil-market news:
- Gasoline futures rose 0.7 percent to $2.1012 a gallon on Friday.
- French energy giant Total SA (PA:TOTF) plans to boost oil exploration and open more fuel stations in South Africa.